Citizen Action: Don’t get Scammed in foreclosure fraud
Falling behind on your mortgage? Don’t get scammed!
*Watch out for Scams
*Recognize warning signs
*Know your rights
*Get free help to prevent foreclosure
*Resources for homeowners
Stop Foreclosure fraud
Watch out for foreclosure rescue scams!
If you have fallen behind on your mortgage, you and your home may become targets for “foreclosure rescue scams” or other types of fraud. When you are faced with foreclosure, your information is made available to the public. In many cases, for profit companies and attorneys will contact struggling homeowners, looking to take advantage of them or make money off of their financial hardship.
Scam artists claim that they can solve your debt problems, get you a loan modification or stop your foreclosure for a fee. NJCA wants you to know how to recognize and protect you from a foreclosure rescue scam.
How the scam works: Scam artists use a variety of tactics to find and deceive homeowners in distress. They often times find homeowners by sifting through public foreclosure notices in newspapers and on the Internet or through public files at local government offices and then send personalized letters to homeowners. Some will even place ads on the Internet, in newspapers, on telephone poles, at bus stops and by going door to door handing out flyers and business cards. Often times their deceptive ads will contain messages like “Stop foreclosure now!”, “Get a loan modification!” or “100% money back guarantee”. The by knowing how they work, you will be better able to protect yourself from fraud.
Phony Counseling or Phantom Help: The scam artist tells you that if you them a fee, they will negotiate with you leader to save your home. Oftentimes they claim to be attorneys and will usually tell you not to contact your lender, lawyer or housing counselor. In some instances, these scammers tell you to send your mortgage payments to them while they negotiate with the lender. Once you pay the fee, however, these scammers disappear with your money without providing you with any assistance.
Fake “Government” Modification Programs: Some scammers may claim to be affiliated with or approved by the government (like HUD) or they may ask to pay high , up front fees to qualify for government mortgage modification programs. The fraudster’s company name and website may sound like a real government agency and use terms like ‘federal’ ‘TARP’ or other words related to official U.S. government programs. HUD-certified housing counselors and your lender will be able to tell you if you qualify for any government programs to prevent foreclosure. You do not have to pay a fee to benefit from these programs.
Bait and Switch: In this case, the scam artist convince you to sign documents for a ‘new loan modification’ or ‘new loan’ that will bring your existing mortgage current. This is usually a trick to get you to sign over the title to your house, which is buried in the stack of documents. Once you do this, you have no ownership of the home.
Rent-to-Own or Leaseback Schemes: Con artists convince you to surrender the time of your home as part of a deal that will let you stay in your home as a renter and then buy it back later. The scammer tells you that this will let a borrower build up their credit so they can obtain new financing in the future-unfortunately, the impossible to do so. Ultimately, you will still lose the home and you are still responsible for the unpaid mortgage because transferring the deed does not transfer the balance owed on the mortgage.
Bankruptcy to Avoid Foreclosure: In this instance, the scammer may promise to negotiate with your lender or get refinancing on your behalf if you pay an upfront fee. Instead of doing this, he pockets the fee and files a bankruptcy in your name-sometimes without your knowledge. While a bankruptcy filing often stops a home foreclosure, it will only stop it temporarily as the bankruptcy court administers the case. Eventually, you must start paying your mortgage or the lender will be able to foreclose. You could lose the money you paid to the scammer and your home-and you will have a bankruptcy filing on your credit report for up to 10 years from the date of discharge.
How to protect yourself from scams: Don’t:
*Don’t sign a contract under pressure
*Don’t sign away ownership of your property to any without the advice of an attorney
*Don’t make your mortgage payments to anyone other than your lender
*Don’t ignore calls or letters from your lender
*Don’t sign blank documents
*Do maintain communication with the lender
*Do contact a HUD-approved housing counseling agency for assistance-this service is FREE
*Do review all paperwork that requires your signature
*Do get all promises in writing and get full copies of all signed documents
* Do set aside your monthly mortgage payments if your lender no longer accepts late/partial payments
*Do beware of anyone who promises to assist you in exchange for a fee
Extra protections in New Jersey:
*The Foreclosure Rescue Fraud Prevention Act went into effect in 2012 and requires that all foreclosure consultants be licensed by the NJ Department of Banking and Insurance and provide you with a contract in writing.
*The Foreclosure Fairness Act protects tenants living in foreclosed properties and requires new owners in provide written notice to tenants of foreclosure properties.
Resources for Homeowners:
U.S. Department of Housing & Urban Development: http://www.hud.gov
NJ Housing Resource Center: http://www.njhousing.gov
HUD Loan Scam Modification Website: http://www.loanscamalert.org
HOPE Hotline: (888) 995-HOPE (4673)
Consumer Financial Protection Bureau (CFPB): http://www.consumerfinance.gov
New Jersey Citizen Action Mission Statement:
NJCA works to protect and expand the rights of individuals and families and to ensure that government officials respond to the needs of people rather than the interests of those with money and power. NJCA seeks to advance a progressive political agenda, through collective action and individual empowerment in communities around the state. NJCA makes a difference for New Jersey by winning real improvements in people’s lives.
The work that provided the basis for this publication was supported by funding under a grant with the U.S. Department of Housing and Urban Development (HUD). The substance and findings of the work are dedicated to the public. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained in this publication. Such interpretations do not necessarily reflect the views of the Federal Government.
To apply for NJCA’s HUD-certified housing or foreclosure prevention counseling service, contact NJCA:
(800) NJ-Owner or (800) 656-9637 or complete an application on our website at:
Counseling is provided in English and Spanish
New Jersey Citizen Action (NJCA) is the state’s largest citizen watchdog coalition, with over 60,000 individual members and 100 affiliate organizations, including a range of senior, labor, religious, civil rights, civic & neighborhood groups. A nonprofit 501(c) (4) organization founded in 1982. Citizen Action’s mission is to secure economic and social justice for all.
New Jersey Citizen Action’s goals are to promote economic and social justice to empower and organize the unorganized to build a strong progressive coalition working on issues of common concern, strengthening our base both collectively as a coalition and as individual organizations.
We work closely with the New Jersey Citizen Action Education Fund (NJCAEF), our 501(c) (3) sister organization that carries out powerful public education, outreach & advocacy efforts to achieve social and economic justice for all.
Citizen Action is a HUD certified housing & foreclosure counseling agency and a HUD designated Fair Housing Agency. We provide free education and outreach to low and moderate income individuals and their families across the state. Our education and outreach programs seek to increase the economic opportunities of low and moderate income individuals and their families including New Jersey Veterans through financial education housing counseling and other asset building programs and services.
For more information on NJCA, visit us on the web at http://www.njcitizenaction.org like us on Facebook or Tweet us @NJCitizen Action.
Disclaimer: This information was taken directly from the NJCA pamphlet and I give them full credit for the information. Please call or email them directly for more information.